GM vs CONVENTIONAL A PRODUCTION ECONOMIC PERSPECTIVE

1. GM vs CONVENTIONAL A PRODUCTIONECONOMIC PERSPECTIVE By: Dr. Duane R. Berglund Professor of Agronomy North Dakota State University

2. 2003 GM Planting Intention

4. USA Soybeans 81 Corn 40 Canola 72 Cotton 73 North Dakota Soybeans 74 Corn 35* Canola 72 Cotton 0 *Estimate GM Crops in 2003- % Acres

5. GM Production Economics • Agronomic costs • Segregation expenses • Competing Commodities • Market impact and risks associated

6. Agronomics and $$$ • Are Yields Increased? • Costs of Input ( Seed and Chemicals) • Cost or benefits for GM crop in rotation/crop sequence/field separation • Control cost of volunteers • Pest Resistance-Weeds or Insects • Technology fee • No Farmer saved seed allowed

7. 2002 -Soybean Performance - ND * Locations: Arthur, Grandin and Northwood ** Locations: Wyndmere, Mooreton and Great Bend

8. 2002- Corn Performance North Dakota

9. GM Canola vs. Conventional

10. Average Canola Yields at Langdon- 2002

11. 2001 & 2002 Average Canola Yields at Carrington

12. Farmer Economic Concerns with the Use of GM Crops • Seed costs – Technology fee or not? • Chemical cost vs. alternative chemicals • Application costs (spraying or tillage) • Crop yields equal or not • Weeds controlled • Market acceptance of GMO’s • Bin-Run Seed –not an alternative

13. Soybean Technology Fee: • 2003 and prior- $8.00 per 50 lbs. (bag) • 2004 – Increased fee- $10 per bag. 50 lb bag of soybeans has approximately 150,000 seeds per bag. • With germination of 90%, Seeding in narrow rows of 175,000 live seed per acre would require 194,500 seeds, or 64.5 lbs. seed. Tech fee cost per acre then would be: $12.96/A.

14. Soybean Economics

15. Corn Technology Fees • RR Corn- $24.00 per bag* • Bt. Corn Borer- $18.00 per bag • Bt. Corn Rootworm - $18.00 per bag • Liberty Link Corn- No Tech fee!! * 80, 000 seeds per bag- Will plant 2.5 to 4 Acres

16. Corn Economics

17. Canola Technology Fee • RR Ready Canola- $15/A planted plus the farmer receives 1 pint/A free of Roundup RT • Liberty Canola- No Tech Fee!! • Clearfield Canola- Not a GM crop, No Fee!

18. Canola Economics

19. Segregation/Testing in Practice • Malting Barley- 100% of malting barley is segregated and marketed by variety • Dry Edible Beans by Class/Var.

20. Soybeans High oleic High sucrose High protein White wheat Malting barley NON-GM0 Soybean, canola and corn. Corn High oil White High amylose Waxy Organic crops Examples of Identity Preserved Grains

21. Segregation and Identity Preserved Crops have what in Common?? Increased Costs-$$

22. Increased costs? • Farm: • Cleaning planters, combines and other equipment • Field locations/induce or prevent cross-pollination • Additional bin storage/cleaning/opportunity costs • The Information Trail

23. Increased costs? • Elevator: • Separate bins/opportunity costs • Dumping in correct pit = added risk of cross contamination • Cleaning pits, conveyors and loading equipment, trucks, and rail. • Terminal elevators- Storage separation, barge loading and separated transport. • Totes are not feasible for high volume commodities

24. Testing: Technology- • Strip tests (protein): • $7.50/test • Time: <1 Hour • Accuracy: 95% • PCR (DNA) --preferred in international contracts (currently used in RRW corn) • 1-2 days • Tolerance/Confidence/cost (Sept 2001) • 1% tol. @ 99% conf. @ $120/test • .1% tol. @ 95% conf. @ $300/test • .1% tol. @ 99% conf. @ $400/test

25. “Field of Dreams”Philosophy of Farmers and Others • Build it and they will come • Produce it and they must buy?? • Mill, press and process it and they will eat it! • We are the primary source of product! • Consumers have little choice!

26. Loss of Markets by GM Crops Risk to add surplus commodity at reduced prices (Examples) • Corn in Europe and Asia • Canola to Europe • Soybeans to Europe and parts of Asia

27. Canola Sales in Millions Dollars by Canada

28. US Corn Sales to European Union ( Tons Sold)

29. US Soybean Sales to European Union (Million Tons Sold)

30. GM Wheat- Production Economics • Increased Yields • Better Crop safety • Reduced Dockage • Less Herbicide cost • Control Volunteers Seed Cost- Higher as no-saved seed • Technology User Fee • Market and Prices

31. Wheat Production Comparison(Estimates) Per Acre Input costs-

32. Other Cost considerations • Conventional Wheat Saved Seed • Purchase of RR Wheat Seed plus TUA fee each year!! • Control of Volunteers in other Crops • Yield advantage? 3 bu/A Sask. Data. • Reduced control costs of weeds in sequential crops • Segregation costs

33. Roundup Ready Wheat and the Markets • International Buyers are saying “no” to Gm Wheat!! • Millers and bakers in USA are negative. • Market prices may drop significantly! How much?? • Fast food industry may become involved

34. U.S. HRS Exports and GM Aversion- 2001 survey

35. GM Wheat: If and When Released • Genetically Modified (GM) wheat such as Roundup Ready wheat is an example of “irreversible technology. • It will cause environmental, production and market externalities. • Without the ability to segregate GM and non-GM wheat in the market channels, the market is vulnerable to downward price trends.

36. Any Questions??